Digital transformation has come to food retailing and supermarkets. We talk with Gabriele Tubertini, CIO at Coop Italia, the largest grocery retailer in Italy.

Gabriele spearheaded the EXPO project, building the supermarket of the future. Prior to joining Coop Italia in September 2011, he served as Operations, Technology & Claims Director at RSA Group, and earlier as CIO at Granarolo (Dairy Products), and as General Manager of Mercato Impresa S.p.A (Milan, Italy).

Transcript

Michael Krigsman:

Welcome to Episode 190 of CXOTalk, 1-9-0. I am Michael Krigsman and today on CXOTalk we are going to speak with the, we have the Italian debut. We have a gentleman, Gabriele Tubertini, who is the CIO of COOP Italia, which is the largest supermarket brand in Italy.

And we are going to be talking about digital transformation in retail and e-commerce. It’s a huge topic. Before we start I want to say a truly heartfelt thank you to Avanade, which is the largest consulting firm in the Microsoft dynamics ecosystem. So Avanade, thank you so much for sponsoring this episode, and as always, a hearty thank you and heartfelt thank you to our video streaming partner Livestream for all of your support of CXOTalk. So, Gabriele Tubertini, you’re the CIO of COOP Italia, how are you?

Gabriele Tubertini:

Hi Michael, thank you very much for having invited me to join the talk. I’m really really excited and I can’t hide it. I’m a little bit nervous [unintelligible] but thank you very much and welcome to everybody who is listening to this talk.

Michael Krigsman:

Well thank you and the truth is I get nervous before every single show. But before we start I hope that, there’s been such a terrible earthquake this week and I wonder whether that has affected you or how that has affected you. Such a horrible tragedy.

Gabriele Tubertini:

Fortunately the earthquake did not affect me directly. It affected a couple of store of our chain, but even if we haven’t been hit directly and personally it is a real disaster. We are really moved for what has happened down in central Italy and we already started to fundraising the fundraising operation in our store and all that to collect money for the reconstruction and we hope that the people that are currently without a roof on their head will be soon able to start a new life.

It will be difficult because when you live in a place where 268 people die because of an earthquake it is difficult to start again but we will do our best to support them.

Michael Krigsman:

And COOP Italia is the largest supermarket brand in Italy so obviously you have a very significant footprint. So tell us about COOP Italia. Tell us about the size of the company and about the company itself.

Gabriele Tubertini:

Yes, COOP has a very long history considering that the foundation of COOP is based back to 1854 even before the Italian state was founded. The first cooperative store was opened in Turin in answer the growing and joint needs of workers to buy [unintelligible] basic commodities such as rice, flour, pasta, soup and salt, and then to resell them to the members at price cost.

A lot of time has passed since and now COOP operates through a network of over 100 consumer cooperatives on the territory, of which 7 generate more than 90 percent of the revenue, so 7 are really, really big company.

And the cooperatives are owned by the members so they are actually owned by the single consumer, owned by the people, and the number of members have recently reached the quote of 8.4 million, so you can understand that is a really huge movement.

Michael Krigsman:

So how is COOP Italia different from other grocery stores? What is the foundation of your strategy or your differentiation?

Gabriele Tubertini:

I’m really glad that you are asking me this question because it allows me to explain a little more of our soul, let’s say. Because COOP Italia really stands out among its competitor and it is a unique experience in the Italian market. In the year, in all these years COOP has always promoted the consumer campaigns and actions for getting products at fair price.

We are set up campaign, as campaign in fight against [unintelligible] we’re also around several activities for breaking monopolies on products and services. For example, drugs in Italy are sold only in authorized store and is still a theoretical monopoly but we’ve done a lot to break it and we’ve now

Michael Krigsman:

Welcome to Episode 190 of CXOTalk, 1-9-0. I am Michael Krigsman and today on CXOTalk we are going to speak with the, we have the Italian debut. We have a gentleman, Gabriele Tubertini, who is the CIO of COOP Italia, which is the largest supermarket brand in Italy.

And we are going to be talking about digital transformation in retail and e-commerce. It’s a huge topic. Before we start I want to say a truly heartfelt thank you to Avanade, which is the largest consulting firm in the Microsoft dynamics ecosystem. So Avanade, thank you so much for sponsoring this episode, and as always, a hearty thank you and heartfelt thank you to our video streaming partner Livestream for all of your support of CXOTalk. So, Gabriele Tubertini, you’re the CIO of COOP Italia, how are you?

Gabriele Tubertini:

Hi Michael, thank you very much for having invited me to join the talk. I’m really really excited and I can’t hide it. I’m a little bit nervous [unintelligible] but thank you very much and welcome to everybody who is listening to this talk.

Michael Krigsman:

Well thank you and the truth is I get nervous before every single show. But before we start I hope that, there’s been such a terrible earthquake this week and I wonder whether that has affected you or how that has affected you. Such a horrible tragedy.

Gabriele Tubertini:

Fortunately the earthquake did not affect me directly. It affected a couple of store of our chain, but even if we haven’t been hit directly and personally it is a real disaster. We are really moved for what has happened down in central Italy and we already started to fundraising the fundraising operation in our store and all that to collect money for the reconstruction and we hope that the people that are currently without a roof on their head will be soon able to start a new life.

It will be difficult because when you live in a place where 268 people die because of an earthquake it is difficult to start again but we will do our best to support them.

Michael Krigsman:

And COOP Italia is the largest supermarket brand in Italy so obviously you have a very significant footprint. So tell us about COOP Italia. Tell us about the size of the company and about the company itself.

Gabriele Tubertini:

Yes, COOP has a very long history considering that the foundation of COOP is based back to 1854 even before the Italian state was founded. The first cooperative store was opened in Turin in answer the growing and joint needs of workers to buy [unintelligible] basic commodities such as rice, flour, pasta, soup and salt, and then to resell them to the members at price cost.

A lot of time has passed since and now COOP operates through a network of over 100 consumer cooperatives on the territory, of which 7 generate more than 90 percent of the revenue, so 7 are really, really big company.

And the cooperatives are owned by the members so they are actually owned by the single consumer, owned by the people, and the number of members have recently reached the quote of 8.4 million, so you can understand that is a really huge movement.

Michael Krigsman:

So how is COOP Italia different from other grocery stores? What is the foundation of your strategy or your differentiation?

Gabriele Tubertini:

I’m really glad that you are asking me this question because it allows me to explain a little more of our soul, let’s say. Because COOP Italia really stands out among its competitor and it is a unique experience in the Italian market. In the year, in all these years COOP has always promoted the consumer campaigns and actions for getting products at fair price.

We are set up campaign, as campaign in fight against [unintelligible] we’re also around several activities for breaking monopolies on products and services. For example, drugs in Italy are sold only in authorized store and is still a theoretical monopoly but we’ve done a lot to break it and we’ve now started to sell drugs, pharmaceutical products in our store.

So we’ve done a lot of battles in favor of the environment for a lawful trade and the ethics. And the COOP private label is probably, so our products, the line of our private label products is the concrete expression of this action. We promote sustainable innovation for lifestyle and consumption that are sustainable. We are running an educational program in school to increase the consumer awareness in the future generation and we firmly believe that Italy’s territories and the great biodiversity of our social and economic patrimony that COOP can [unintelligible] better than our competitor, than multi national companies or other retailers and we really protect the potential of this huge treasure.

Consider that COOP is, ok is not as big as Walmart for people that are attending from US, but we are quite big. As you mentioned, COOP is the largest Italian retailer chain. We have a turnover of around 30 billion euros, and that means we have almost 19 percent of market share, of course food and grocery categories are the main part of our business and generate 80 percent of the revenues but non-food categories are still important in our markets and we handle 20 percent of our business made over non-food categories.

Michael Krigsman:

So, you are a huge company, very, very large organization and you are the chief information officer, so please tell us about your role.

Gabriele Tubertini:

Yes, I am the chief information officer in charge of the team management and the organization. So I was a supporter of the change process, so I look after not only the technical and the infrastructure but also the process changes and the impact on the organization.

I started working COOP Italia in 2011 after a long career. Unfortuantely I’m quite older so I started to work for [unintelligible], the company that is now [unintelligible] and I spent 10 years with them. And then I covered several CIOs, mostly in the financial service. I’ve been CIO in an insurance company for 5 years, in an English insurance company.

But now I work for another big consumer good products producer in Italy, nothing too exciting. 2011 I started my career with COOP Italia.

Michael Krigsman:

So COOP Italia has 12 billion dollars in revenue and the retailing environment is changing so dramatically so when we talk about digital transformation and the impact on retail, what does that actually mean for you and for COOP Italia?

Gabriele Tubertini:

It means a lot because digital is, well how should I say, digital is rattling the retail landscape in a way on a number of fronts and we are going to have to try to make the right move and to pick up the pieces.

So I was reading a research during all of this and was surprised reading that 18 percent of the consumer are currently using at least one online channel while searching for merchandise. Of course we are not talking general because we must, we should distinguish between food and non-food but nevertheless I think that this number is really surprising.

So 18 percent of the people use online tools or online channel when they are performing a search for products. The same research said that the one, sorry 4 in 10 were even more digital interactions, so the amount for digital is crazy.

And I know that I have travelled around Europe and also I came to the U.S. a couple times and I’ve seen that there are stores or retailers that are really struggling to move and become a multi-channel in order to satisfy this huge demand of digital. But unfortunately for sure the customer is going digital, but the question is the profit moving in the same direction?

This is a really difficult question to answer because profit margins are really at stake because in order to fulfill the demand for digital service, the consumer demands for digital service, we must invest and we must change our process and also they expect to pay the product less, and this puts our marginality, our profit at stake.

So we should try to really take the actions that are really needed and think very well before moving because otherwise if we can’t reverse this trend it will be hard to maintain our competitiveness.

Michael Krigsman:

So you really have no choice in a sense because as you said, 80 percent of consumers are doing online research and yet at the same time, as you said, your profit margins are at stake, which means that you’re faced with the intense demand from consumers for greater digital experience.

And so how do you balance your profit margins against changing consumer expectations?

Gabriele Tubertini:

If we go a little bit deeper in the details of this discussion I will say that fortunately so far, as far as the food categories are concerned, we are for sure experiencing a huge increase in request for digital services, but this is more focused on information.

People want to know, they want to obtain information on the product characteristics of the products they are buying. And usually, we are starting to see that this request goes far. The circle of information that are normally provided on the labels that are displayed on the product label.

So then our consumer that are happy with everything that the label, but there is a growing movement of people that are really interested in knowing every single word they are eating.

So the way of providing information is dynamically changing. As I said, the customer evolved from traditional to people that are still using traditional tools for whom a static product label is still enough, to the people we can call digital savvy.

And these kind of people are asking for interactive digital touch points, they are looking for searching tools, web or mobile—better if mobile—to browse among products and eventually find an ideal choice. So just to make an example, say that we have a customer interested in buying organic cheese. What they expect now-a-days is that they have available, they can use a mobile application to perform a search enough so that having displayed on its screen all the cheese that are in assortment, and then all the cheese in the assortment than are organic and then they can narrow their search and obtain other information like nutritional facts, calories, (audio cuts out briefly) and then they can finalize the reason when they find the product that best fits their needs.

So, we are not talking about something that is in the world of the fantasy. It’s something that is already happening, and they do this all along, the customers I mean. Sometimes when they are at home, sometimes when they are on the go, and of course while they are in the shops.

Michael Krigsman:

We have a question from Twitter, from Arsalan Khan (sp?) who’s asking that, he’s saying that Europe has different privacy regulations than in the U.S., and so as you were developing customized services for your buyers, for your consumers, how do you manage the privacy issues?

Gabriele Tubertini:

Of course all the tools, all the service that we provide to our customer are 100 percent compliant to the privacy declaration that is currently in [unintelligible] to the Europeans or the Italian privacy declaration. Of course the European declaration is slight difference, a little bit more narrow, a bit more tough than the U.S. one about the, there is no difference in reality in the way of managing the privacy information and the customer… sorry, I have problem with my lamp.

Michael Krigsman:

That’s ok, so basically what you’re saying is that the privacy is built in, it’s simply a fact of life and everything..

Gabriele Tubertini:

Yes, every time that we build a new service we go through the kind of information that we need from the customer to provide the service, and together with our legal department and our legal counselor, we put together procedures that are compliant with a law that is enforced in that moment.

Michael Krigsman:

So let’s go back to the consumer and you were talking about digitally savvy consumers, and they want greater information about the foods that they’re buying. And so what does that mean for COOP Italia? What do those expectations mean for you?

Gabriele Tubertini:

Of course this changed expectation for obtaining information mean quite a big impact on our internal processes because I didn’t mention before, I mentioned before that we are very tough, very, very strong in private labels.

That means that we are a sort of manufacturer. So, in COOP Italia we design and think and do all the marketing and research to find which kind of private label products will go into the store. And performing this process, we are completely innovated this internal process that underlies the development of private label products because we must ensure that all relevant information that are created throughout the different stages of the process are properly collected and stored because we actually use them later when the customer want to start this experience.

For doing that we have developed the complex and the state-of-the-art digital solution that are both web and mobile to make the oldest, huge [unintelligible] information available to our costumers so they can have an easy access and quickly find the answer the question they have.

And we strongly believe in transparency and the [unintelligible] of the food products, as I said before. And just to mention to you and to our audience a practical example: In 2013 leveraging this huge patrimony we had developed a mobile app called COOP Origini, so COOP Origins.

Using the app, the customer simply scan in the barcode with the use of a smartphone could have all the information of the countries of the origins of the raw materials, which is not something that we must provide by law. So we must tell to the people, to the consumer which ingredients are inside a product, but we don’t have to tell them from which country the flour is coming from. We did this to be completely transparent to them and of course we could do that because our internal process over building, over thinking and developing our private label products has been completely reshaped.

Michael Krigsman:

So this has very significant implications for how you think about—this change in consumer expectations let me say, has very significant implications for how you think about your processes, but it sounds like it also has very significant implications for your relationship not just with the consumer, but with your entire supply chain.

Gabriele Tubertini:

Yes I will say that from the supply side of the digital transformation, I will say that the digital transformation on the supply side started far, started before to impact on the final consumer, so we have done a lot in the past with our network of supplies in order to digitalize the food process and to share information with them, to share products, recipes, to select the right certificated producer, so I would say that digital transformation as we mean with this terms if more impacting on the consumer as far as we think it’s concerned.

So retail business has done a lot in the late 90s, early 2000s to streamline the supply chain, so we have leveraged a lot with the advent of the EDI, of the service of interactive touch or web services so we have done a lot in that direction.

So exchange of stock information in order to reduce the risk of stock out and also to reduce the risk of absorbency for example for electronics products is something that was started in that year. So now-a-days the impact is just, is more on the consumer side, at least this is my humble opinion.

Michael Krigsman:

So you had previously put into place programs for efficient electronic exchange of information with your suppliers which makes all of your digital transformation efforts today much easier. But it sounds like the driver here is the customer journey: customer expectations have changed and the customer journey has changed and therefore COOP Italia has had to change its processes fairly significantly in some areas.

Gabriele Tubertini:

Yes, the customer journey has changed dramatically. In the past we could compare the customer past purchases to a funnel. It used to be leaner. The steps were done in sequence.

We started with the awareness of the need, then the customer started to develop a rational alternative based on the tools that he had available, then he made the selection of the brand of the product he thought was best for him, then the purchase and finally if he was satisfied, that ended up with loyalty to the brand and also to the retailer because when a customer was happy with a service provided that he received from a store, usually he became a loyal consumer.

Now-a-days, the process has been completely changed so the technology acceleration—with the technology acceleration the customer’s journey has become dynamic and continuous. So we see non-stop consumers that, as I said before, are always on line. When they are on the Metro, when they are on the busses, when they are on the train, they keep on checking newsletter from retailers and sometimes the buzz is even too strong, sometimes they are confused, they are receiving so many information.

And so this customer have more tools than ever before and for sure the ease they have in getting the right advice and reviews and obtaining information allow them to compare a huge greater, a huge great number of alternatives.

And I will say that one of the things that is at stake is loyalty because even if nobody was happy of the experience with the product or with a shop or with a store, if he finds, if he has tools to make faster research, he’s not so much interested in loyalty as long as he find the same products at the lower price with the other service.

Michael Krigsman:

So you said earlier that digital transformation, e-commerce, your margins are at stake, and now you’re saying customer loyalty is at stake, and so it sounds like if loyalty and your margins are both at stake that digital transformation presents some very significant challenges to a retailer.

Gabriele Tubertini:

Yeah we have to sort out the big conundrum we have to try to keep the business as it is. To stay [unintelligible] through our brick and mortar business or to be so brave to be the first mover.

Consider that, coming to Italy, so that was I was saying before is, I think is a general view of the global market. Italy, luckily for us, compared to what I’ve seen in the US or in the UK for example, we are still a little bit behind the reality stage of the digital wave.

So from one side we are actually ahead of the game in this smartphone penetration because consider the 70 percent of our cities and only the one or more smartphone. But they still use it for gaming, for chatting, for social networking and so, so the user mobile phone for consumer’s journey in Italy is still for the digital savvy one.

I wouldn’t see millennials, sorry, generation x’ers or before using mobile to perform their selection, their personal selection. Nevertheless, as we said even in Italy the impact of the digital transformation is important and varies significantly according to the product categories we are talking about, because if we take into account the non-food categories, for example consumer electronics, home appliances, apparel and clothing, fashion, the change of the purchase in behavior is already at the, I would say at the advanced stage.

Customer receiving a promotion, they look at them, seek information through Google and social network, and so on. The evolution is already under way, but when we move to the food industry city the scenario is different. So the inevitable digital disruption is yet to come.

It will come but we still have some time. Not so much, but some time is left.

Michael Krigsman:

I want to remind everyone that we are talking with Gabriele Tubertini who is the CIO of COOP Italia which is the largest supermarket brand in Italy with annual revenues exceeding 12 billion dollars, and I want to thank Avanade for sponsoring this episode. You guys are great, thank you for that and also Livestream for general awesomeness and supplying our video infrastructure. And if you have questions, right now there’s a Tweet chat going on on Twitter with #CXOTalk, so tweet your questions and we’ll try to get them answered.

So Gabriele, what about the business model? How is all of this affecting COOP Italia’s business model?

Gabriele Tubertini:

To answer this question I have to complete the analogies that we were doing before. So I will say that there is difference between non-food categories and food categories and in fact we have differentiated that we are opposed to digital transformation and for food, we are investing and struggling and collecting and created the huge databases, huge web service in order to provide all the kind of information the consumer might ask us.

But in the non-food categories we have already done more, we have already moved, starting from 2013, to e-commerce. Following the structure of our brand, we have created several portals differentiated by categories and by territory. And of course, to me, that’s why I’m making this point before I answer your question, because I think that the main change in our internal business process is to place when we had to implement and adapt our system and our organization to the management of the non-food e-commerce, the portal, the non-food business on e-commerce.

So we set up a team and dedicated tools for content management. That was something we didn’t do before so we have to create all the product, information, we have to prepare all the comparison between products’ functionalities. So, we had to create a complete environment for managing content specific to spell the good on the portal.

We have built a real time service for inventory because when somebody, when a customer puts an order online he must see if the product is available or not, and this is something that can make the success of the purchasing process, of the sales process.

And we have created also tools for the price optimization which is something that we also are planning to do in our traditional business (brick and mortar business), but for the online business, price optimization tools is something that you must have, because you must be able to change your price every moment during a campaign, during the day, during the weekend because you must understand where the money’s going, you must understand where the price of the competitor both online and offline are moving, you must define which margin you want to obtain by a sale and you must have a smart and clever calculator that performs exercise for you so you can change the price immediately to meet the demand that is in place in that specific very moment.

I think that most of all, the most impactful change concerned our [unintelligible] operation. As COOP Italia we manage the supply chain for all the non-food categories, so we manage TVs, consumer products, bicycles, apparels and so on. And our [unintelligible] was organized in order to work by boxes, so we received order and the (audio cuts out briefly) a store could order was a box, but when you move to e-commerce you must work by item and we have a very difficult decision to make.

Either you create two different or two separated [unintelligible] one to fulfill the amount of the store, and another to work support of the e-commerce business, or you have to try to merge the process together.

And this for sure from a cost perspective or the most effective way, but you must change the system. You must change operation, you must change the process and you have to train the people so because the same cleric, the same person must be able to prepare an order for a store and at the same time, let’s say one hour later, he could be called to prepare an order for the e-commerce business.

So that for sure has been the main impact that we had when we had to adapt our business model to meet the digital transformation.

Michael Krigsman:

And you are looking at expansion abroad, if I am correct?

Gabriele Tubertini:

I am really happy that you asked me this question because I’m proud to make an official announcement to say that what we are experiencing is that the consumer love for Italian food is really, is experiencing, what I would say is an overwhelming growth in many countries of the world.

But the expert of middle Italy, of real middle Italy food is still in its infancy. If you look at the numbers, less than 10 percent of our production is exported, compared to the number of Italian, “supposed” Italian products out on the shelves. So we have a, there is a huge potentially in this sector, in this area.

So if we combine this global trend with the obsessive attention that we put in the development of our products and in the careful selection of industrial partners that produce our private label goods, we understand the real reason we have decided to expand our business beyond national products.

And at the end of 2015 we have established a company in Yucco called the COOP Italian food which has the aim to aggregate its network of over 500 certified and guaranteed manufacturing power plants that are able to produce any kind of good to cover all the food and grocery category, and they are able to make this product available to foreign retailers who want to expand their assortments with real Italian, with authentic middle Italy.

I don’t want to make any complain or to start any debate but when we as Italian go abroad, when we visit supermarket in US and UK and see the parmesan cheese or the pasta is something that we cannot stand, something that really make ourselves a little bit uncomfortable.

So COOP Italian food has already established a commercial relationship with France, our products are already sold in a big, big chain in France. We started our business also in China, Dubai, Bugai and Japan and Korea, Cyprus and so on and we are approaching the US.

We went in Chicago in the Idea formai exhibition together with the Avanade guys that you mentioned before to present our company and we plan to arrive, to disembark in the US market at the beginning of 2017 if everything goes smooth.

Michael Krigsman:

Well of course I’m from New York, and of course in New York you can get

great Italian products, food products. But now I live in Boston and so we’ll be watching to see whether we can start to eventually get these great Italian foods that you’re describing.

Gabriele Tubertini:

Do you have Italy in Boston, or not? Italy?

Michael Krigsman:

We have the north end, it’s the Italian district.

Gabriele Tubertini:

In New York, as I think you know very well, in front of the Flat Iron Building there is the Italy store.

Michael Krigsman:

Yes.

Gabriele Tubertini:

Maybe it could be interesting for our audience to know that the Italy business was started with the participation of COOP. So at the beginning of the start of the company COOP was one of the main stakehold, shareholder, so we were part of the Company.

Michael Krigsman:

Well, Italy in New York, what an incredibly place that is. And I tell you what, when you come to New York, you let me know and let me take you for lunch at Italy.

Gabriele Tubertini:

I will pay the bill in Italian.. in the American one.

Michael Krigsman:

So we have about 10 minutes left and I know that an important project that you’ve been working on has been the supermarket of the future that you’ve been involved with collaborated with today’s show sponsor, Avanade. So please tell us about the supermarket of the future.

Gabriele Tubertini:

Yes, maybe everybody knows that, I hope that everybody are aware that in 2015 Italy has hosted, Milan has hosted one of the most important event in the last decade for Italy. That was the Expo of 2015, so the team of the Expo was Feed the Planet, Energy for Life and the aim of the exhibition was to discuss our food habits are strictly tied up with the global sustainable growth and how they must change it to allow a more balanced distribution of the issues among the world corporation.

This is a real important topic because given that the growth of the corporation is targeted to reach 9 billion people in 2050, we don’t have enough resources to feed them all. Even now-a-days, a big percent of the people is underfed but the problem will only rise with time and change.

So when Expo held the bid to select the official food distribution partner, given that we are the leader of the Italian market, and we are really engaged in the sustainable arena, in the arena of sustainability we have decided to participate in the bid that we won. And so we become the official food distribution partner for expo. We are in charge of the construction and the operation of one of the expo pavilion, the supermarket of the future.

And I was the operation, the project manager of the initiative, the operation project manager of the initiative. There was a manager that was looking after the assortment, the parts that should be planned and so on and I was the one in charge for guaranteeing that the pavilion was built in time and was working as designed. The concept, the interesting thing that the concept of the supermarket of the future was the [unintelligible] and design by Carlo Ratti who is the director of the MIT Senseable City Lab.

He’s considered as one of the most influential personalities in architecture and engineering. He’s an Italian but he works in the US and is a very famous person. So we teamed up with him and his collaborators so with our internal engineering company [unintelligible] and on the IT side which was Avanade and [unintelligible] to be our trusted technology partner.

So we developed the supermarket of the future. I’ll try to be faster since we are pushed for time but the concept was based on two main pillars. The first is that in the supermarket of the year 2050 which is the year that we were trying to forecast, the technology will have a lower interests and type of areas that are categorized in the supermarket we had since the beginning. So if you think that the traditional market are designed to ensure the maximum efficiency, both for the retailers, we wanted to display as much as we can in the smallest space possible and for the customer that wanted to find all the needs in the shortest time and go back home to have his dinner.

And so the shelves are tall, and the aisles are narrow, so basically socialization that you can have inside the supermarket is really limited. But we think that the technology will happen and there will be this barrier if we put [unintelligible] allow you to stock the products very close to where they have to be replenished. So the number on display on the shelf can be reduced, can be lowered and the shelf becomes stable, and you reopen the space to the view of the visitor and the supermarket become like the squares in the Middle Ages, or the galleries of the 19th century.

And the second thing, the second pillar was the idea that every product has an accurate and precise story to tell. And so we set up a solution, a very technology oriented solution that was not using any cameras on device like, so people were not asked to download a mobile application on their smartphone, to use their tablets or to virtual reality glasses. Just simply indicating the product on the table with a finger, with a suspended screen on top of the table. There was suspended screen on top of the table that was showing all the information related to the products, describing exactly the origins of the materials, the impact, the environmental impact of the products.

So we were just trying to meet the expectation I was describing before, so the aware customer, the more informed customer wants more information and we have to provide them to him in the easiest way. I think there is nothing easier than moving your finger towards a product and obtain all the information as you need.

Michael Krigsman:

And so this sounds very interesting. So you worked with Avanade to build the concept and to actually create this supermarket at the expo.

Gabriele Tubertini:

Exactly. We worked with Avanade using Microsoft technology in order to perform the triggering of the finger indication. We used the motion sensing device, the normal Kinect that I think, I’m sure a lot of the people in the audience have at their home to make gaming. So we had something like 250 Kinect in 1500 square meters.

In fact one of our main concern before opening the pavilion was how can you have so many Kinect working in a so limited space because usually you have one Kinect in your house. And it was funny when we asked this question to a Microsoft expert or an Avanade expert. We asked him, so do you think there will be a problem in testing 250 Kinect in the same area (we were at the very beginning of the design) and he said ‘I don’t know because I’ve never tried with more than 1 Kinect.’

So the challenge seemed really, really tough. So but everything but was working so the pavilion was, all the experience and all the visitor interacting experience in the pavilion was working from day one. I’m glad to say I really, we were really, really amazed that we received a very important prize because we won the prize for the best use of technology from the exhibit or magazine. So that was evaluating the different use of technology inside a different pavilion at the expo and trust me, there was a lot of technology for those that didn’t visit the exhibition and that we won.

Michael Krigsman:

Wow, that’s amazing. So that was a kind of prototype and do you think that that prototype that you had created that you won, won the prize, will actually be constructed?

Gabriele Tubertini:

Yes, we listed that during the concept design phase we had to address a lot of issues, but prototyping, testing, made ourselves every day more confident that we could make it, and I think that this experience has given us, given to call a fantastic opportunity to play with a new concept of store that is not only based on efficiency but is also based on experience.

And technology, the fantastic, the wonderful technology that [unintelligible] and [unintelligible] allowed us to put in place was really important but the most important thing was the reaction of the customer, the wow effect. At the beginning they had the experience, the so called wow effect, they were impressed by the ease of obtaining information. But afterwards they started to look at the data. So they were not only playing with interactive devices, but they were also interested in understanding what the products had to tell.

And so now we are thinking just to make an other announcement here, that I’m proud to tell the audience that the creation of the supermarket of the future in the real network, in the store network is now a real initiative. Again, together with Avanade and [unintelligible] and Microsoft, by the end of the year we brand to open a brand new store in Milan that will be built on a very similar concept of the one at the expo, and the store will act as a sort of permanent laboratory that we will use to introduce a new concept. So we started with the concept of the expo but in the years we plan, in the following years we plan to introduce a new concept of layouts, a new concept of experience, a new concept, a new use of technology. And this is something that we are very proud of.

Michael Krigsman:

Wow, well that’s ah, I hope that when you build it out, I hope that you’ll come back to CXOTalk and share your experience with us.

Gabriele Tubertini:

I will be more than happy to do that. And when you come to visit us in Milan I will take you to visit our brand new shop. You must come in the beginning of our next year.

Michael Krigsman:

Ok that’s a date. Well everybody, this draws to a close episode #190 of CXOTalk. We’ve been speaking with Gabriele Tubertini who is the CIO of COOP Italia, the largest supermarket brand in Italy with revenue over 12 billion dollars. Our sponsor for the show has been Avanade, which is the largest consulting organization in the Microsoft dynamics and Microsoft technologies ecosystem. And of course I always want to thank Livestream for their awesome support of CXOTalk. Thank you everybody for listening, Gabriele, thank you to you, and please come back next week and join us again. Bye bye.

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